2014 MarsdenLR 2262
HIGH COURT MALAYA IPOH
EKAJAYA (M) SDN BHD – Appellant
Versus
AHMAD MAHAD & ORS – Respondent
[Appeal No: 16-12-10/2012]
In determining employment status, courts consider control, integration, and economic dependency, affirming workers' rights to benefits under the Employment Act irrespective of contractual labels.
Headnote:(A) Employment Act 1955 - Sections 2 and 69 - Employment (Termination and Lay-off Benefits) Regulations 1980 - Lorry drivers claimed termination benefits after being abruptly terminated via SMS - Company contended they were independent contractors, not employees under the EA - Assistant Director of Labour concluded they were employees due to control and integration factors (Paras 4, 6, 55, 81).
(B) Employment Status - The determination of employment status considers factors such as control, integration, and the economic realities of the working relationship - Workers were integrated into the business and economically dependent on it. (Paras 14, 30).
Facts of the case:
Respondents, lorry drivers for the Company, were terminated via SMS, leading them to file claims for termination benefits under the EA after working between 2 to 8 years without written contracts.
Findings of Court:
The workers were found to be under a contract of service, entitled to termination benefits totaling RM62,494.25 with interest from 2 May 2012.
Issues: The main issues were whether the workers were employees under the EA or independent contractors, and the validity of the termination benefits claims.
Ratio Decidendi: The court upheld that the 'Control Test' and 'Integration Test' indicated an employer-employee relationship; thus, the workers were entitled to benefits under the EA and the regulations, as no contract could flout statutory obligations.
Result: Appeal dismissed with costs.
| Table of Content |
|---|
| 1. employees were unfairly treated upon termination. (Para 1 , 2) |
| 2. company's control over drivers indicates employment relationship. (Para 3 , 4 , 6) |
| 3. determining employee status under employment act. (Para 8) |
[1] The Respondents, all 24 of them, were lorry drivers and in their eyes, they all worked for the Appellant Company who were their employer. They were tasked by the Company to drive lorry tankers carrying cement. They have worked, some as long as 8 years and the shortest was for 2 years with the Company. They were accustomed to receiving SMS messages from the Company with respect to work orders. However on 1 August 2005 they all received from the Company a short and rather strange SMS message in their mobile phones stating that they were all "to park the lorries near the Company's office and to return to the office the "Shell Petrol Card" and keys to the lorries." They were told by the Company that the price of diesel had gone up very high and the customers refused to increase the transport rate and as such the Company could not sustain the business and had to stop taking orders from the customer.
[2] They felt that they had been unfairly treated and terminated and they went to file their claims with the Director General of Labour on 16 August 2005 under s 69 of the Employment Act 1955 ("EA") for their termination benefits under the Employment (Termination and Lay-off Benefits) Regulations 1980. An inquiry was held pursuant to s 70(c) of the .
Problem
[3] The Company at the hearing before the Assistant Director of Labour contended that the workers were all independent contractors and not employees within the meaning of the EA. The Company also argued that consistent with being independent contractors and not as employees, the workers were not given paid public holidays leave, annual leave and sick leave as provided for under the . Neither were they paid more for work on public holidays and weekly holidays. In other words, the workers could be required to work on public holidays and even 7 days a week. They did not have a weekly holiday. It was a case of no work no pay. They did not have fixed working hours and may work more than 8 hours per day and even up to 24 hours with no extra pay for overtime! If the Company had no orders from its customers for the transport of cements, then there would be no work for the workers and hence no commission. Moreover their monthly pay is not fixed per month because it is dependent on the number of trips they could make with the lorries, the tonnage of cement and destination. The number of trips was in turn dependent on the orders placed by the customers of the Company.
[4] The Assistant Director of Labour held that these workers should not be faulted merely because the Company wanted to flout the law. She also held that as the Company owned the lorries, it had sufficient control over the drivers and the manner in which the task was performed by them. She also found as a matter of fact that these workers were an integral part of the business organisation of the Company in fulfilling its business process. She further found that the Company had made Employees Provident Fund (EPF) contributions to the EPF Board by deducting the employees' contribution and contributing the employer's portion and forwarding them to the EPF from the salary portion of the employees' pay. The salary slips produced as evidence also showed two portions of the payment or so-called commission received by the workers ie "salary" and "loading". The EPF paid was only paid on the "salary" portion apparently to avoid paying a higher contribution to EPF.
[5] Contributions were also made by the Company to PERKESO under the Employees' Social Security Act 1969 .
[6] The Assistant Director of Labour concluded based on the overall evidence adduced that the workers were employed under a "contract of service" within the meaning of the EA and not as a "contract for services" or as an independent contractor. She also